Apple planning new TV box amid talks with cable companies

Adam Satariano, Edmund Lee

Apple is planning to introduce a new Apple TV set-top box and is negotiating with potential partners to add video content, according to sources with knowledge of the matter.

Apple is aiming to unveil the device by April and have it available for sale by the Christmas holidays, though the release date could change because the company is still in the process of securing new agreements with programming and distribution partners, said two sources, who asked not to be identified because the plans are private.

The new device, which plugs into a television, will have a faster processor than the previous version and an upgraded interface to make it easier for customers to navigate between TV shows, movies and other online content, one source said.

One partner Apple is said to be in negotiations with is US cable TV network Time Warner Cable. An agreement with the network would mark the first such deal with a cable or satellite company.

Apple spokesman Tom Neumayr declined to comment, as did Maureen Huff, a spokeswoman for Time Warner Cable.

The product would set off what Apple chief executive Tim Cook has promised to be a year full of new product introductions. The company also is exploring a smart watch, sources familiar with the plans have said. Apple needs new gadgets to revive growth after sales and profit stagnated in recent quarters.

Existing structure

The release of an updated Apple TV box would be different from a full-sized television, which industry analysts such as Gene Munster of Piper Jaffray have predicted.

Apple's talks with Time Warner Cable have been going on since at least the middle of last year. The lag time between when Apple may announce the new set-top box and its release is because of ongoing negotiations with content providers.

The Time Warner deal would let Apple TV customers see a wider array of live TV channels. For the moment, they can access a limited number of individual channel apps, including Disney, ABC, ESPN, HBO, PBS and Bloomberg TV.

Access to some programming on Apple TV requires customers to prove they pay for cable or satellite, a process known as authentication. Each different app requires a login and password to be entered.

Fewer steps

Apple has been working to streamline the process with the new Apple TV and has run into problems with Comcast and DirecTV, the two largest pay-TV distributors in the US, according to two sources with knowledge of the matter.

Eddy Cue, the head of Apple's iTunes, has been trying to convince the two companies to let customers use Apple IDs instead of credentials from Comcast and DirecTV, these people said. The distributors would prefer keeping their customer information separate from Apple, according to the sources.

In the market for digital set-top boxes, Apple is competing against Microsoft's Xbox One and Roku's internet-connected device. Amazon has also reportedly been working on a TV box, and Comcast entered the market late last year with its new digital interface – called X1 – that sells and rents TV shows and films much the way that Apple does through iTunes.

More devices

For Time Warner Cable, the deal would advance its "TV Everywhere" strategy, giving customers the ability to watch content on different devices. Its viewing app is already available on Apple's iPad and tablets running Google's Android software, as well as Roku and Amazon's Kindle Fire.

Time Warner's app currently features 300 channels though it doesn't fully replace its set-top box. The cable company had to secure streaming rights to allow viewing on digital devices, an increasingly important component of negotiations with the TV networks.

As portable devices become more popular, Apple has focused its TV strategy on promoting the iTunes digital store. iTunes sales – which include apps and music – surged 25 per cent to $US16.1 billion ($18 billion) for the fiscal year ending in September.

Media companies that own TV shows and movies have been reluctant to sell content directly to online services such as Apple because it could harm the business of cable and satellite providers, whose licensing fees make up a substantial part of their revenue. Apple is attempting to address those concerns by partnering with cable companies.

The Apple-focused news website 9to5Mac previously reported the company was working on an updated Apple TV.